Banking stocks remained unruffled in the face of fresh allegations of money-laundering by banks and insurers made in the latest revelations by online magazine Cobrapost. Banking stocks remained flat, with the broad-market indices, Sensex and Nifty, going up a marginal half per cent.
The Bank Nifty index started the day on a weak note, but picked up during the day to end at 12,396, up 0.02 per cent from its previous close. This was similar to the March 13 expose, when three big private banks - ICICI Bank, HDFC Bank and Axis Bank- were accused of money laundering. On that day, the stocks of these banks declined significantly, only to gain the lost ground by the end of the day.
"There are bigger concerns that the banking sector is facing today," said Mehraboon Jamshed Irani, principal and head of private client group at brokerage house Nirmal Bang.
According to market experts, the Cobrapost expose lost its novelty factor this time around. They said by accusing 23 banks and insurers, the expose had neutralised the effect on the whole sector. The expose, the second of its kind by the online magazine, has named financial giants such as State Bank of India and Life Insurance Corporation. This, experts admitted, confused the investors as to the extent of wrong-doing.
"If everyone is in the wrong, then who is doing the right thing? We will need to wait and see what the Reserve Bank of India (RBI) will do," said a banking analyst with a mid-sized broking firm.
Further, experts added there was a certain amount of tiredness that had crept in due to endless scams and exposes, making investors indifferent. "There is a certain degree of cynicism among investors about this endless supply of scams... at the margin, they have lost their ability to shock. But having said that, these stocks will be under the scanner, with RBI launching substantial investigation into the banks' various practices, KYC (know your customer) norms and selling of third party products," said Saurabh Mukherjea, head of equities at Ambit Capital.
